Point to reducing Overdraft limit?

BuffetSlayer said:
I'm not 100% sure on this, but I thought an overdraft classed as unsecured debt, even if you dont use it? So it could mean if you want to apply for credit they may take it into acount when credit scoring you. For instance if you had a 5 grand overdraft you didnt normally use, you still have the potential to be 5 grand in debt (along with the associated charges) and any lender would need to consider that in terms of completing an affordability assessment on you.

I am pretty certain they wanted to know what my overdraft and credit limits on credit cards were when we applied for our mortgage.

I'm probably completely wrong though! Hopefully someone will drop in and clarify either way :)

Cheers

Buff
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I have a £6700 unused overdraft left over from the days I used to be a student over 12 years ago. It has never worked against me since I have graduated for a mortgage or car loans etc.
 
Some mixed views here it seems. My train of thought is just that I am to buy my first house in the new year, so I'm thinking whether it would be good to scrap my overdrafts (if it would positively improve my lending/mortgage capacity) or should I keep the available credit just in case I might need it in an emergency situation (say there is an unforeseen issue with my new home that costs me £1k's to remedy).

mrbell1984 said:
I never been in overdraft, always had the money to buy what I want. My overdraft on my current debit account is £100.00.
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Wonderful, congratulations, I applaud you. *salutes*
 
Two reasons:

1) Potentially increase the chance of being accepted for other credit applications
2) Useful to limit the spending of people with little self control

Personally I wouldn't bother though.
 
Captain Planet said:
Some mixed views here it seems. My train of thought is just that I am to buy my first house in the new year, so I'm thinking whether it would be good to scrap my overdrafts (if it would positively improve my lending/mortgage capacity) or should I keep the available credit just in case I might need it in an emergency situation (say there is an unforeseen issue with my new home that costs me £1k's to remedy).



Wonderful, congratulations, I applaud you. *salutes*
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Bows down. I was always taught if I don't have the money don't buy it.
 
If you feel you need to, to stop you getting into trouble, then yes.

If you can handle having the credit facility and not using it then leave it be.

My building society offered me another credit limit increase this week and I happily took it despite having no intention of using it. But you never know when you might need it...(even temporarily).
 
BennyC said:
If you feel you need to, to stop you getting into trouble, then yes.

If you can handle having the credit facility and not using it then leave it be.

My building society offered me another credit limit increase this week and I happily took it despite having no intention of using it. But you never know when you might need it...(even temporarily).
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I'm going to ask the mortgage advisor what he thinks regarding borrowing and any effects this may have.
 
mrbell1984 said:
The amount we waste for no reason is crazy as humans. :mad:
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Yes, I understand, you're going to rant about something completely unrelated to the topic, effectively trolling. If the op was "please give me your view on credit, at the same time give us an idea just how narcissistic you are, oh and while you're at it, tell us all your overdraft limit" then you're just about there, however, I'm just not that interested.

Something I am interested to know though, am right to assume you never want/need a mortgage or higher education/degree say? Should anybody have these things if they're not rich to afford them out right? Because as far as I can read, this is what you believe yes? :)
 
peige said:
Been looking at this as I've been paying attention to my credit rating right now and having a large over draught facility seems to be a positive thing when its not being used.
It shows as being positive as lenders (ie the bank) are prepared to lend you money.
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This.

My Experian credit report shows the amount of available credit (excluding mortgages) and the percentage of my total credit being used (excluding mortgages). My credit score recently increased because my total credit being used reduced to something like 15%, which shows that I am not struggling or using all of my available credit.

I would definitely keep your overdraft limit as it is, your percentage of total credit being used will be lower which will have a positive effect on your score.
 
Captain Planet said:
Some mixed views here it seems. My train of thought is just that I am to buy my first house in the new year, so I'm thinking whether it would be good to scrap my overdrafts (if it would positively improve my lending/mortgage capacity) or should I keep the available credit just in case I might need it in an emergency situation (say there is an unforeseen issue with my new home that costs me £1k's to remedy).
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Trust me. I work for a mortgage company and an overdraft facility will not go against you unless you are using it. If you were using it, it would go against your 'net debt to income ratio'. I have both credit cards and overdrafts, both are unused. The facility is there if required and in case of emergency.

A mortgage company knows full well there is nothing stopping you, once having taken the mortgage out, in racking up debt. Mortgage companies make a lot of money in re mortgaging properties where the owner has personal debt and is doing so to repay it.

Myself and my missus are currently moving and she has some personal debt. All we had to do was tell them that it is to be repaid once the house is sold and they have accepted that verbally and are not seeking to make sure it is repaid.
 
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